Mayor: 'We've got some severe management issues at LP&L'

As the days continue to get warmer and the hottest months are right around the corner, many Lubbock residents will be turning up their air conditioners.

It's common to see electric bills go up during these months, so many Lubbock Power & Light customers are asking why the rate increase now?

On Thursday, the Lubbock City Council approved a 9.7% rate increase for LP&L in a 6-1 vote. That's about $7 to $10 more per month for the average customer. The increase will go into effect on June 1.

This is the first time the company has raised its rates in around 4 years.

Gail Kring, Lubbock Electric Utility Board chairman, says the rate hike was necessary to keep LP&L from operating at a deficit. Kring says LP&L lost $3.2 million last year and this year they are at a $7.6 million dollar loss. So in order to make up that revenue, Kring says they needed to have a rate increase.

"We buy all of our purchase power from Xcel (Energy). They have raised the rates twice since 2009. They have two more increases this year. So when you're buying purchase power & you're selling it for less than you're buying it, you lose money," Kring said.

Kring wants LP&L customers to know that even with the rate increase they still have the cheapest electric rates in Texas.

"For the majority, I think the people understand we can't continue to pay more for electricity than we sell it for," Kring said.

Mayor Glen Robertson was the lone "no" vote on Thursday. He wanted to wait and implement the increase on Oct. 1.

"We're hitting our citizens with an almost 10% increase right as we go into the hottest months this summer. Hit them June 1st with a big electric rate increase I didn't think was fair, I still don't," said Mayor Robertson.

The mayor agrees that a rate hike should have happened, but he did not agree it should have happened so soon.

"This is going to be a significant impact for some folks and to just hit them really without any warning, I'm concerned with. So I think if we postponed it to October it would have been easier for people to handle, easier to budget and it would have been a lot easier for everyone in Lubbock to swallow the increase," he said.

Mayor Robertson says one of his biggest concerns is that LP&L hired a rate consultant and spent almost a quarter of a million dollars on a study. He says the consultant did recommend the 9.7% increase, but they recommended it to be implemented on October 1.

"It bothers me that we spent $250,000 for these consultants and we took the part of their advice we wanted to, but ignored the part that didn't fit what LP&L wanted," he said.

The other council members said they did not like the rate hike, but felt they had no choice because they don't want to jeopardize LP&L's bond rating, especially when they are looking at possibly borrowing hundreds of millions of dollars to build a new power plant by 2019.

"I find it ludicrous that anybody from LP&L, anybody on the LP&L board, or anybody on this council can say that the reason they voted for this is they were concerned with rating agencies. That has been addressed in all the consultants and all the studying that we had done," the mayor said.

He says he believes LP&L should look at the other side of the equation, at their expenditures.

"They created a new position that they're paying $230,000 to a gentleman. They've created a new assistant to the executive that's a cost of $68,000. They requested a 15% pay increase for their senior account. So it doesn't mix. Nothing adds up here. I think we've got some severe management issues at LP&L and just throwing money at the problem is not going to fix the fact that we're overspending. We had a cost overrun of $3 million on one project last year at LP&L. That is almost equivalent to the entire loss they had for the year," he said.

"I had a councilmember say, ‘Well Mayor, you lost that one.'" That bothers me more than anything because the truth is…and I turned around and said, ‘No, the citizens lost this one.'"